Conquering Change in Oil and Gas: How To Build a Learning Organization

Former United States Secretary of State Colin Powell likes to tell the story of how Israeli Prime Minister Shimon Peres put his arm around his shoulder after the dissolution of the Soviet Union in 1991, and said, “We have lost our enemy; all we have now are problems.” Peres was certainly thinking of dangers that threaten all nations: poverty, famine, religious radicalization, desertification, drugs, proliferation of nuclear weapons, and ecological devastation.

While it is not immune from global threats, the oil and gas industry faces its own set of persistent and continuously emerging challenges that drive change in the industry. They are

Innovation: technology to boost output, processes that promote efficiency, new industry structures and alliances. Tim Dove, president and chief operating officer of Pioneer Natural Resources, said that hydraulic fracturing means that there are no dry holes. As a result, he believes that exploration and production firms have become similar to manufacturing companies. Their success depends on efficient operations.

Capital: how much oil can be produced at what cost. The amount of oil that can be recovered is no longer constrained by geology. As George King, a global technology consultant for Apache Corporation, told the Wall Street Journal, “the constraint on how much oil can be produced isn’t geological … we face technical and economic limits more than anything else.”

Talent: accelerated attrition of baby boomers in the senior ranks. Industry firms face the rising practice of “poaching” of high potential leaders. On the other hand, firms struggle to accelerate young professionals into the “age of accountability” as leaders. The local Dallas chapter of Young Professionals in Energy has more than 4,100 members, making it one of the largest trade organizations in Texas. Andy Long, its 26-year-old chairman, has established a mentor program to connect its members and college students with industry veterans.

Global: opportunities worldwide are not limited to the majors. Heyco Energy Group, an exploration company that has been active in the Permian Basin since the 1960s, today holds positions in 1.4 million acres in Spain and United Kingdom. Science and technology have turned the basin into “the hottest spot on earth,” according to Chief Executive Officer George Yates, and we “asked ourselves ‘where could we succeed given our experience and advances in technology?’ Europe was an obvious place.”

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